What Sequestration Could Mean for Science Funding (and Why Misunderstanding Fiat Currency Matters)

No, sequestration isn’t referring to a biological process, but the aftermath of last year’s debt ceiling shenanigans. According to the agreement reached last year (which Republicans, behind the scenes, are trying to slither out of, at least on the defense side–once again, showing that they talk the talk, but don’t walk the walk), over the next ten years, there are supposed to be $1.2 trillion of tax increases and cuts. If no agreement on how that’s supposed to be done exists, then automatic cuts kick in (this is fucking stupid, as I’ll explain below).

The best estimates I’ve seen so far indicate that discretionary, non-defense spending–which includes science funding–will be cut by ~7.5%. Mind you, that doesn’t mean NSF and NIH will necessarily be cut, although it’s safe to say their budgets won’t increase (although I encourage you to sign this petition arguing that NIH funding should increase and this one to get it on the White House’s agenda).

We have now reached the point where we have to choose among research, health, and the poor. And there is no reason to be in this position. Leaving aside the macroeconomic benefits of NIH funding, there is no reason to do this. Would maintaining, or even modestly increasing research budgets cause a massive misallocation of human reources? I must have missed the Great PhD Shortage of 2011. Would it cause critical raw goods shortages, or limit our industrial capacity? Of course not.

The only thing limiting is currency. And we can fix that:

As I’ve written many times on this blog, lots of things can be limiting: resources, infrastructure, personnel. But when you have a fiat currency (as the U.S. and U.K. do), money is never limiting–it’s like being on the gold standard while being able to manufacture gold out of thin air. You can no more run out of money than Fenway Park can run out of runs* (you might have inflation or misallocation of resources, but with male employment at a historic low, unemployment high, manufacturing at less than 75% capacity, and real wages down ten percent over the last year, inflation is not a concern). This is why cutting budgets is so stupid.

Just spend the damn money. Do some good research and create some more jobs.

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1 Response to What Sequestration Could Mean for Science Funding (and Why Misunderstanding Fiat Currency Matters)

  1. Oscar Zoalaster says:

    I tried to leave a snarky comment using my usual identity, and stupid WordPress erased my comment and told me that I had to log in – even though I had already given an email address and my usual identity. Furthermore, there is no place for me to log-in, even though stupid WordPress tells me I have to. If I’m supposed to freaking log-in at least stupid WordPress could let me do so!

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